Closing costs big variable in getting mortgage

It's tough getting a mortgage these days, and even if you manage to pull one off you might end up paying more than your fair share in closing costs.

That's what the federal Department of Housing and Urban Development believes.

To back that up, HUD released a study late last week from the Urban Institute that found that confusion during the mortgage process generally leads to higher closing costs. Those costs vary by wide amounts, even among borrowers with similar traits.

HUD would like to see standardization when it comes to closing a home loan.

"Closing costs are all over the map. The willy-nilly standard is the only standard," said HUD spokesman Brian Sullivan.

The Urban Institute found significant variations in loan charges, title fees and other costs charged to homebuyers when they close escrow. Minority buyers also pay hundreds of dollars more in total loan origination fees than do nonminority homebuyers.

"This report demonstrates once and for all that the process consumers endure when they buy their homes is entirely too confusing," HUD Deputy Secretary Roy A. Bernardi said in a statement. "Clearly, we need to open the window and allow consumers to understand the fine print and shop more effectively for the largest purchase of their lives."

HUD has proposed that all mortgage lenders and brokers provide consumers with a good-faith estimate, giving buyers a realistic estimate of how much they'll actually be paying for that house.

Good luck with that.

The study focused on more than 7,500 mortgages originated in May and June 2001. That seems like a long time ago, but it was a period of relatively stable interest rates. And it was also before the market got superheated and the refinance boom ensued.

The study found that:

Fees can vary by thousands of dollars from borrower to borrower, even for the same loan amount.

Even in the same state, disparities in title costs among identical borrowers can be more than $1,000.

The average borrower sees no reduction in out-of-pocket fees when they agree to higher interest rates.

Black homeowners pay an average of $415 more and Hispanic borrowers pay $365 more in loan origination fees than nonminorities.

Consumers obtaining "no-cost" loans, or those for which comparison shopping is easiest, saved an average of $1,200.

HUD's proposal for standardized fees quickly met with opposition.

Read more...

Appraisers played role in loan crisis

As soaring home prices set the stage for America's great housing meltdown, a critical step in making sure those home sales were a fair deal - the real estate appraisal - was undermined from within.

After the nation's last major banking disaster, Congress set up a system to catch rogue appraisers. Their game is to inflate the value of homes at the direction of equally unscrupulous real estate agents and mortgage brokers, whose commissions are determined by the size of the deals.

But a six-month Associated Press investigation found that the system is crippled by the bumbling of regulators, as well as their inability to effectively punish those caught committing fraud.

Critics say there's ample evidence that appraisers are being pressured into inflating home values - sometimes to support loans that are more than buyers can afford - but that regulators have made a conscious choice not to act.

"The system is completely broken," said Marc Weinberg, the former acting director at the federal agency charged with monitoring the appraisal industry. "It's amazing that the system ever worked at all."

The AP conducted dozens of interviews and reviewed thousands of state and federal documents. It found:

-- Since 2005, at the height of the housing boom, more than two dozen states and U.S. territories have violated federal rules by failing to investigate and resolve complaints about appraisers within a year. As a result, hundreds of appraisers accused of wrongdoing remained in business.

-- The only tool federal regulators have to force states into compliance would essentially halt all mortgage lending, so has never been used.

-- State and federal agencies are inadequately staffed to handle the hundreds of complaints made each year.

"The appraisal reforms of the late 1980s were good reforms," said Susan Wachter, a real estate professor at the University of Pennsylvania's Wharton School of Business. "But they were not sufficient to prevent what we have seen ... because regulation without teeth is not regulation."

This is the way the system is supposed to work:

Typically, an appraiser receives an order from a real estate agent, lender or mortgage broker to inspect a property. Based on a physical inspection of the home and comparable sales in the area, they develop an estimated value that is used by banks to set the home's value as collateral for the mortgage.

Appraisers are supposed to come up with a value free of any outside pressure. But more than three dozen appraisers interviewed by the AP said they often felt pressure to "hit a number."

Read more...

Q&A: Responding to mortgage meltdown

Innocent victims of tough times

I am a brand-new mother to a now 5-month-old daughter. I lost my job at 6 months pregnant due to this mortgage meltdown. My husband and I have struggled from that point, surviving on one income and our savings. We fell behind on our mortgage payments because of my job loss and are now facing foreclosure.

It's extremely scary to know our new family may not have a home. We don't have a subprime loan or an adjustable rate like most in this mess. We took what we thought was the responsible route and an honest loan fixed rate on an A+ paper. I think the government should help out homeowners who took out honest loans, not ones they couldn't afford to begin with.

JULIE JONES

Fresno

Spread the pain

When is it the responsibility of the public to bail out greedy people? If the people who ran the companies had all their assets frozen to help pay these costs, I would be much more understanding. The mortgage brokers, CEOs and all others involved should have to fear the same things that the people losing their homes feel. Freeze the bank accounts, houses, cars, whatever.

JOHN ARCHBOLD

West Hills

On bubbles and brewskis

As a retired bank manager, I witnessed many people applying for home loans for which they just

didn't qualify. So they did what so many others did: went to a mortgage company that gave them the loan they couldn't afford.

Too many people have champagne appetites with a beer budget. Get a clue: If you can't afford the mortgage, then you sure won't be able to afford the upkeep.

TERRI GLASER

Simi Valley

Resignations, regulations

All Fed governors, including Mr. Bernanke, should resign and his predecessor should be investigated by a special prosecutor for his part in reducing interest rates to dangerously low levels. Members of Congress, who pressured lenders to make loans to unqualified people, should also resign. And Congress should enact a banking law that requires that all mortgages be issued only by real banks.

Freddie Mac and Fannie Mae should be allowed to survive or fail based on accepted accounting principles. A strong dollar, tightened interest rates, good policing and less exporting of labor will solve the problem.

Read more News...

'Liar loans' threaten to prolong mortgage crisis

In the mortgage industry, they are called "liar loans" - mortgages approved without requiring proof of the borrower's income or assets. The worst of them earn the nickname "ninja loans," short for "no income, no job, and (no) assets."

The nation's struggling housing market, already awash in subprime foreclosures, is now getting hit with a second wave of losses as homeowners with liar loans default in record numbers. In some parts of the country, the loans are threatening to drag out the mortgage crisis for another two years.

"Those loans are going to perform very badly," said Thomas Lawler, a Virginia housing economist. "They're heavily concentrated in states where home prices are plummeting" such as California, Florida, Nevada and Arizona.

Many homeowners with liar loans are stuck. They can't refinance because housing prices in those markets have nose-dived, and lenders are now demanding full documentation of income and assets.

Losses on liar loans could total $100 billion, according to Moody's Economy.com. That's on top of the $400 billion in expected losses from subprime loans.

Fannie Mae and Freddie Mac, the nation's largest buyers and backers of mortgages, lost a combined $3.1 billion between April and June. Half of their credit losses came from sour liar loans, which are officially called Alternative-A loans (Alt-A for short) because they are seen as a step below A-credit, or prime, borrowers.

Many of the lenders that specialized in such loans are now defunct - banks such as American Home Mortgage, Bear Stearns and IndyMac Bank. More lenders may follow.

The mortgage bankers and brokers who survived were more cautious, but acknowledge they too were swept up in the housing hysteria to some extent.

"Everybody drank the Kool-Aid" said David Zugheri, co-founder of Texas-based lender First Houston Mortgage. They knew if they didn't give the borrower the loan they wanted, the borrower "could go down the street and get that loan somewhere else."

The loans were also immensely profitable for the mortgage industry because they carried higher fees and higher interest rates. A broker who signed up a borrower for a liar loan could reap as much as $15,000 in fees for a $300,000 loan. Traditional lending is far less lucrative, netting brokers around $2,000 to $4,000 in fees for a fixed-rate loan.

Read more...

Internet makes mortgage scouting a little easier

Mortgage lenders have raised the bar on what it takes to qualify for a home loan the last couple of years, but shopping for a loan online has actually gotten a bit easier, if not necessarily less confusing.

Where mortgage-scouting Web sites traditionally required users to enter a swath of personal information to generate rate estimates, the newest sites offer users a way to comparison shop for a loan under the cozy blanket of anonymity.

Question is, do these rates hold up once real names, credit scores and other personal details come into the picture?

"My gut instinct is that there will be a wide disparity about what rates are quoted on these sites and what they actually end up with, and not necessarily due to the borrower," Robert Statnick, chairman of the California Mortgage Bankers Association. "All the sites may not collect all the data that's necessary to give an actual price quote."

In fact, the lenders ultimately do collect the data they need to figure out what to charge for a loan, but these sites have made it possible to delay that step to give the prospective borrower enough time to shop incognito.

Zillow.com and MortgageMarvel.com have embraced this consumer-friendly concept in the past year, although that's where their similarities end.

Mortgage Marvel bills itself as the mortgage-shopping version of travel sites Orbitz.com or Expedia.com.

Like those sites, Mortgage Marvel lets users enter details

on the kind of loan they need. The site then rounds up real-time rate and lender fee quotes directly from hundreds of lenders.

The site boasts that users don't need to punch in personal details to get real rates, not teaser rates used to bait visitors. But the catch is users must have a credit score of 720 or better.

The site requires users to enter only the loan amount, the property's value and its ZIP code. The site then displays a list of lenders offering quotes on the loan.

But there's where your anonymity ends. To find out whether you qualify for the rate, you must fill out an application full of personal information with the lender.

"It's easy, reliable, accurate and fast - there's no bait-and-switch," says Dan Welbaum, chief marketing officer for Mortgagebot.

Zillow's Mortgage Marketplace page also doesn't ask for identifying information. It only requires an e-mail address.

Read more...

American Cities See Record Annual Foreclosure Rate Increases in Q2

Record high foreclosure rates in the second quarter were reported in Los Angeles, Seattle, Miami and New York, according to a report issued by PropertyShark.com.

Los Angeles led the four cities with a 282.01% increase in the second quarter compared to last year's Q2. Los Angeles reported a record 14,505 new residential foreclosures according to the report issued by PropertyShark.com. The amount of newly scheduled trustee sales soared by 63% in comparison to the previous year.

"The foreclosure chart is unfortunately starting to look like a ski jump, with the current number of new trustee sales this quarter increasing at one of the highest rates we have seen over the last two years," said Property Shark Foreclosures Product team member, Adina Dumitru.


New York City reported 961 new household foreclosures in Q2 2008, a 49.22% increase from the Q2 2007. Single family homes located in Queens and Brooklyn made up the bulk of properties that were being auctioned, the report noted.
Read more Article...

Economists Divided on Direction of Economy, Inflation

With the second half of the year just beginning, economists are questioning if the worst of the U.S. downturn is already over, or whether uncertainty about rising prices spells more gloom and doom for the economy.

Thursday's BLS nonfarm payrolls report for June showed the sixth month of consecutive declines in the U.S. economy, totalling 438k net losses this year and indicating further deterioration is to come. However, economists say it is not job losses that are the major concern heading into the third quarter, but rising prices.

While there is pressure for the Fed to combat inflation, the central bank remains constrained not only by broad-based, anemic growth, but by the fact that soaring energy prices are caused by increased global demand rather than by U.S. consumers.


Charmaine Buskas, senior economics strategist at TD Securities, said the first half of 2008 "didn't see as much fallout as we would have expected," noting that the downswing in jobs was much weaker than in previous downturns. She noted job losses have yet to exceed 88k per month, whereas previous downturns have reported monthly declines of more than 100k and even as many as 200k, which "suggests recent deterioration has been tame."
Read more Article..

Fed Report on Inflation Prompts Moderation in Interest Rates

Mortgage interest rates dropped slightly during the week ended July 3 according to results of the Primary Mortgage Market Survey released by Freddie Mac.

The 30-year fixed-rate mortgage (FRM) eased back from the 6.45 percent with 0.6 point that it had averaged for the week ended July 26 to 6.35 percent also with 0.6 point.

The 15-year FRM fell down below 6 percent as the average contract interest rate went from 6.04 percent with 0.6 point the previous week to 5.92 percent with 0.6 point.

The rate for adjustable rate mortgages also moderated. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 5.78 percent, a 21 basis point drop from the previous week. Fees and points were unchanged at 0.7.

One-year Treasury-indexed ARMs averaged 5.17 percent with 0.6 point. One week ago the average was 5.27 percent with 0.6 point.

"Mortgage rates reversed their three-week rise, falling this week after the release of the latest Federal Reserve's (Fed) policy statement that it expects inflation to moderate later this year and the reporting of May's timid increase in core personal consumption prices," said Frank Nothaft, Freddie Mac vice president and chief economist. "According to recent trading activity in federal funds futures, market participants lowered somewhat their expectations of future rate hike hikes by the Fed compared to last week.

"Housing affordability fell in April due to gains in median house prices during the month, according to the National Association of Realtors. However, even with the recent erosion in affordability, homes were still more affordable in April than during the 2005-2007 period of skyrocketing house prices."

The Weekly Mortgage Applications Survey for the week ended July 4 was released on Wednesday by the Mortgage Bankers Association. It showed both mortgage loan activity and interest rates increasing during that week.

The average contract interest rate for 30-year FRMs increased from 6.33 percent to 6.43 percent with points, including the origination fee, decreasing to 1.06 from 1.09.

15-year FRMs increased from an average contract interest rate of 5.90 percent to 5.94 percent with points increasing from 1.02 to 1.10.

The interest rate for one-year ARMs increased 10 basis points to 7.24 percent with points decreasing to 0.26 from 0.31.

Read more news..

U.S. Foreclosure Rates Decline in June, Says Realtytrac

According to Realtytrac's most recent survey, foreclosures in the United States are down 3.0% in June compared to the previous month's levels, but up 53% from the previous year.

"June was the second straight month with more than a quarter million properties nationwide receiving foreclosure filings," according to James J. Saccacio, CEO of RealtyTrac. "Foreclosure activity slipped 3 percent lower from the previous month, but the year-over-year increase of more than 50 percent indicates we have not yet reached the top of this foreclosure cycle.

Bank repossessions, or REOs, continue to increase at a much faster pace than default notices or auction notices. REOs in June were up 171 percent from a year ago, while default notices were up 38 percent and auction notices were up 22 percent over the same time period."

Read more news..

Mortgage Rates Fall in Response to Speculation about Overnight Bank Rates

Rates for both short- and long-term mortgages tumbled last week according to Freddie Mac's Primary Mortgage Market Survey.

The 30-year fixed-rate mortgage (FRM) dropped to an average of 6.26 percent with 0.6 point for the week ended July 17. The previous week the 30-year averaged 6.37 percent also with 0.6 point.

The 15-year FRM averaged 5.78 percent with 0.6 point, down from the previous week when it averaged 5.91 percent with 0.6 point.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) carried an average interest rate of 5.80 percent, 2 basis points below the average a week earlier. Points averaged 0.6 both weeks.

One-year Treasury-indexed ARMs averaged 5.10 percent with 0.6 point compared to 5.17 percent with 0.5 the week before.

"Mortgage rates fell this week amid market speculation that the Federal Reserve (Fed) may not raise the overnight bank-lending rate this year after all," said Frank Nothaft, Freddie Mac vice president and chief economist. "Some of the factors motivating the change in market perceptions this week included retail sales for June rising at the slowest pace since February and consumer sentiment in July holding at low levels not seen since 1980.

"In addition, in his July 15th semi-annual testimony before Congress, Fed chairman Bernanke indicated that the FOMC participants had considerable uncertainty surrounding their outlook for economic growth."

The Mortgage Bankers Association (MBA) released the results of its Weekly Mortgage Applications Survey for the week ended July 18 on Wednesday. Mortgage activity as measured by the volume of loan applications dropped 6.2 percent from a week earlier when seasonally adjusted and 6.1 percent unadjusted. Volume was down 19.6 percent from the same week in 2007.

Read more news...

New 2008 Highs for Mortgage Rates

Fixed-rate mortgages (FRMs) hit the highest levels of 2008 during the week ended July 24 according to Freddie Mac's Primary Mortgage Market Survey.

30-year FRMs averaged 6.63 percent with 0.6 point for the week, compared to 6.26 percent with 0.6 point a week earlier and the 15-year FRM averaged 6.18 percent with 0.6 point, up from 5.78 percent the previous week.

Shorter-term adjustable rate mortgages (ARMs) also set records for the year. The five-year Treasury-index hybrid ARM averaged 6.16 percent with 0.7 point, an increase of 36 basis points in a week. Fees and points during the week ended July 17 averaged 0.6.

One-year Treasury-indexed ARMs carried an average contract interest rate of 5.49 percent this week with a 0.5 point, up from last week when it averaged 5.10 percent with 0.6 point.

"Market concerns about rising inflation and the greater probability that the Federal Reserve (Fed) will raise short-term rates this year all combined to push mortgage rates higher this week," said Frank Nothaft, Freddie Mac vice president and chief economist. "Some of the key drivers to these concerns were consumer prices jumping 1.1 percent (annualized) in June - the largest increase since September 2005 on a year-over-year basis - coupled with consumer prices growing at a 5.0 percent clip (on a year-over-year basis), the strongest since February 1991.

"Additionally, home prices fell 4.8 percent between May 2007 and 2008, according to the Office of Federal Housing Enterprise Oversight's monthly house price index. And new construction of one-unit homes fell to 604,000 units (annualized) in June, the slowest pace since January 1991."

Read more news...

Loan officer training vs Short Sale Loan Officer Training

Loan Officer Training

Traditional Loan officer training courses are offered by almost all finance and mortgage training institutes in a revised pattern these days. The real estate sector being on a constant boom, not considering the recent crisis, the mortgage industry careers have gained a lot of demand in the market. Doing a mortgage loan officer training course may end up adding some extra value to your curriculum vitae and make your profile stand out while you go for interviews. Many people are unable to learn as they have to work to feed themselves and their families. For such people, these institutes offer online courses. The online courses are easily accessible by the users once they log on to the site. The portion is divided into a number of sections so as to make it easier for the user to use the exact part that he or she wants to. The user has to complete a specific part of his or her work in a specific given time schedule. Thus, the online course helps teach its users some time management.

The loan officer training course is now-a-days available in a revised pattern as the old pattern is considered inefficient by experts. The new pattern tends to impart a lot of practical knowledge than theoretical. The loan officer training course includes video clips which help the candidate understand more and make his or her mortgage related fundamentals clear. With the help of these video clips the candidates come to know about the exact steps that they should take when they are stuck in any difficult situation.

Loan Officer Training Course

The course includes subjects like loan originating, mortgage products, mortgage appraisals and underwritings which are extremely important from the point of view of a career in the mortgage industry. The loan officer training course also helps to instill values like time management, getting and retaining customers, avoiding mistakes and taking perfect actions when stuck in situations. All these values are extremely important for a mortgage official. The courses also have timely tests and quizzes to help the students revise their studies and to avoid making the course a monotonous job to be done.

The loan officer training course is also an option for already trained loan officers to revise their knowledge and learn a few more new things. The combination of heir experience in the field and the certificate of this new course may help them increase their efficiency at work and their incomes. On the completion of this course, the candidate gets a 12 month valid license. In these 12 months the candidate may repeat his or her course or work and gain some more experience. Thus, this course and the 12 months after it, make you efficient enough to handle everything on your own and start doing the real job. The only thing to be worried about is that the mortgage industry is defined differently at different places, thus you cannot work on the same license at two different places.

Short Sale Loan Officer Training

In today’s real estate market, the once lucrative opportunity of being a loan officer or mortgage broker originating loans and refinancing homeowners is no longer so lucrative. The subprime mortgage meltdown and the mortgage credit crunch has really put a damper on that traditional business model.

Read more...